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Market Brief: Nikkei 225 and Hang Seng in the Red, USDJPY Steady on Dovish BOJ


With it being Thanksgiving Day in the US and without much economic data, market investors were left to brace for the worst in today’s trading. The Hang Seng index led losses among Asian equities markets. As of this writing, it is down around 500 points or 1.86% at 26,397.2. Meanwhile, the Nikkei 225 finished today’s trading lower by 115.2 points or 0.49% at 23,293.9.

Trade Deal Woes, HK Protests

Risk aversion seems to be looming on the horizon. This was instigated by US President Donald Trump’s decision to approve the Hong Kong rights bill into law. It is widely seen to side with pro-democracy protesters and the Chinese government has warned to retaliate against it. Without any official response from China, market participants are teetering at the edge of their seats. If they make good on their threat to impose tariffs on US goods, we may not see a deal inked this year.

It also did not help Asian stocks that there are rumors going around that protests will be held all over Hong Kong this weekend. This is in response to the local government’s muted reaction to the landslide victory of the pro-democracy party during the last local elections.

Dovish BOJ

As for currencies, USDJPY finished yesterday’s trading flat as it rebounded from an intraday low of 109.31 to close at 109.50. It was just 2 pips shy of where it opened. The currency pair is trading a little lower today despite BOJ Governor Kuroda’s dovish remarks. In a speech, he was quoted to say that the central bank will not veer away from its 2% inflation target. He also said that they have room to ease monetary policy further and will not hesitate to do so if the situation calls for it.

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USDJPY Outlook

The weekly chart of USDJPY shows that the currency pair is about to test a confluence of resistance around 109.75. For one, the area coincides with the 200 SMA and 100 SMA. Second, it also aligns with the falling trend line (connecting the highs of September 30 2018, November 2018, and April 21, 2019).

If buyers get rejected at this level, we could see USDJPY begin a downtrend towards is yearly low at 104.70. However, a strong bullish close above 109.75 could mean that the currency pair may soon tap its April 21 highs at 112.35.Download our latest quarterly market outlook for our longer-term trade ideas.

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